The Political Economies of Media: the Transformation of the Global Media Industries
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Winseck, Dwayne. "Financialization and the “Crisis of the Media”: The rise and fall of (some) media conglomerates in Canada." The Political Economies of Media: The Transformation of the Global Media Industries. Ed. Dwayne Winseck and Dal Yong Jin. London: Bloomsbury Academic, 2011. 142–166. Bloomsbury Collections. Web. 2 Oct. 2021. <http:// dx.doi.org/10.5040/9781849664264.ch-006>. Downloaded from Bloomsbury Collections, www.bloomsburycollections.com, 2 October 2021, 09:36 UTC. Copyright © Copyright in the collection and in any introductory and concluding materials © Dwayne Winseck and Dal Yong Jin 2011. Copyright in the individual chapters © the Contributors 2011. You may share this work for non-commercial purposes only, provided you give attribution to the copyright holder and the publisher, and provide a link to the Creative Commons licence. 6 Financialization and the “Crisis of the Media” The rise and fall of (some) media conglomerates in Canada Dwayne Winseck Carleton University his chapter examines the crosscutting dynamics that have reshaped the Tnetwork media industries in Canada over the course of the past 15 years, with occasional glances back to the 1980s. Three questions are at its core: First, do new digital technologies, especially the internet, pose fundamental threats to well-established media players or create a larger media economy within which they can expand? Second, have media markets become more concentrated or less? Third, are the media “in crisis”? I argue, fi rst, that the media economy has grown substantially and that the rise of new players such as YouTube (Google), Apple, Facebook, MySpace (News Corp.), and Wikipedia has been especially strong in Canada and added to the media economy, without cannibalizing the economic base of traditional media. Second, I show that the media have become more concentrated and that a half-dozen media conglomerates now form the centerpiece of the network media economy in Canada. Adding four other second-tier fi rms to the list yields what I call the “big 10” media fi rms: Rogers, Shaw, Quebecor, CTVglobemedia, Bell, Canwest, Torstar, Astral Media, Canadian Broadcasting Corporation (CBC), and Cogeco. Finally, I argue that massive increase in the capitalization of media fi rms since the mid-1990s has fundamentally altered the organizational structure of media fi rms and the “operating logic” of the media industries overall (Bouquillion 2008; Miège 1989). The media are in a heightened state of fl ux, but I argue that the current woes besetting some media enterprises are not primarily due to the steady onslaught of the internet or declining revenues as advertising shifts from “old” to “new” media. Instead, I argue that contemporary conditions refl ect a short-term, cyclical decline in advertising caused by the 142 CH006.indd 142 6/10/2011 6:44:22 PM FINANCIALIZATION AND THE “CRISIS OF THE MEDIA” 143 economic downturn, the accumulated results of two waves of consolidation (1995–2000 and 2003–7), and the “fi nancialization of the media.” The concept of fi nancialization directs our attention to the capitalization of the media industries alongside the traditional focus of critical media political economy on media ownership, markets, regulation, commodifi cation, digitization, and so on. The concept highlights the extraordinary growth in the size of the fi nancial sector and fi nancial assets relative to the industrial and other sectors of the economy over the past 25 years, especially since the mid-1990s. These developments have been enabled by the steady liberalization of fi nancial markets, the search for new modalities of capital accumulation in the face of persistently low levels of overall economic growth in the Western capitalist economies since the 1970s, the rapid growth of network information and communication technologies, and accelerated global fl ows of capital. It also refers to a condition where fi nancial capital and, crucially, financial models drive the strategies and evolution of the rest of the economy, as has been especially evident with respect to the telecom, internet, and media sectors globally and, as this chapter demonstrates, in Canada (Duménil and Lévy 2005; Foster and Magdoff 2009; Phillips 2009). Paying close attention to the dynamics and discourses of fi nancialization also offers a potential bridge between critical political economy and critical cultural political economy insofar as it highlights how the discourses and models of fi nancial actors constitute an image of reality around which fi nancial actors organize their behavior, including allocating enormous sums of capital investment to fi nancial market trading, mergers and acquisitions, corporate restructuring, and so forth—even if the desired aims fail to materialize or, worse, lead to calamitous consequences, as attested by the ongoing global credit crisis that began in 2008 (Jessop 2008; Sayer 2001; Thompson 2010a). The logic of fi nancialization is particularly important to recent developments across the media industries because it has, paradoxically, not only created greater media concentration but also bloated media giants that have sometimes stumbled badly and occasionally been brought to their knees by the two global fi nancial crises of the twenty-fi rst century (2000–2; 2008–). Indeed, several bastions of the “old order” assembled just before or after the turn of the millennium subsequently have been restructured (Bertelsmann, ITV) or dismantled (AT&T, Vivendi), have collapsed in fi nancial ruin (Canwest, Craig, Kirch), or have abandoned early visions of convergence altogether (Bell Globemedia, Time Warner). The woes of these entities offer a cautionary tale regarding the impact of fi nancialization on the media, rather than a tale in which the internet, changing media behaviors, and declining advertising have precipitated a “crisis of the media.” These trends are global in scope, but as this chapter shows, the conditions in Canada are unique (Scherer 2010). CH006.indd 143 6/10/2011 6:44:23 PM 144 THE POLITICAL ECONOMIES OF MEDIA A bigger pie? The vast expansion of the network media economy, 1984–2009 That the media are in crisis often appears to be a given, with no shortage of examples that seem to prove the case. To take just a few of these for examples, Canwest and CTVglobemedia closed several television stations in 2009, while workers of the former acquired one of its stations in Victoria, BC, and another in Hamilton, Ontario, was sold. TQS, the second largest private French- language television network, was sold to Remstar in 2008 by the consortium of Cogeco, the Canadian Imperial Bank of Commerce (CIBC), and BCE that had previously backed the beleaguered network. Even the CBC’s advertising revenue dropped signifi cantly in 2007–8. Profi ts for private conventional television fell to zero in 2008, and revenues declined from $2.2 billion to $2.1 billion (Canadian Radio-television and Telecommunications Commission (CRTC), 2009b). Daily newspapers also seem to have been hit hard, and several—National Post, Brockville Recorder and Times, The Chatham Daily News , and The Daily Observer (Pembroke)—pared back their weekly publishing schedule in 2009 from 6 days to 5. Newspaper revenues declined slightly, and daily circulation fell yet again from 4.3 to 4.1 million between 2008 and 2009 (Canadian Newspaper Association (CNA) 2010). A slew of layoffs by Rogers at its Citytv stations in 2009 and 2010 (140 jobs), CTVglobemedia in 2009 (248 jobs), and Canwest in 2008 (500 jobs) and 2009 (an additional 15 percent cut in the workforce or 1,400 jobs) only seems to reinforce the view that a secular wave of destruction has pummeled the traditional media (Canwest 2009; Toughill 2009). Broadcasters’ incessant pleas to the CRTC to shore up their supposed faltering economic base have been met with several modest initiatives, including the implementation of a “local programming improvement fund,” more fl exibility for broadcasters to negotiate fee-for-carriage arrangements with cable and satellite distributors, permission to include advertising in video-on-demand services, and a willingness by the regulator to entertain the potential for all television distributors—including currently exempt internet service providers, wireless service providers, and content aggregators such as Apple, Google’s YouTube, and Zip.ca—to be required to fi nancially support Canadian content (CRTC 2009c, 2010). 1 At the same time, the regulator’s decisions regarding “network neutrality” and media concentration have favored established telecom and media providers, on the dubious grounds that they possess the deep pockets and inclination to invest in network infrastructure and high-quality journalism and programming (CRTC 2008, 2009d). Clearly, the “media in crisis” argument is being mobilized, but policy responses thus far have been subdued relative to the anguish hanging over the press in the United States and television news in Britain or relative to the $850 million newspaper bailout in CH006.indd 144 6/10/2011 6:44:23 PM FINANCIALIZATION AND THE “CRISIS OF THE MEDIA” 145 France in 2009 (Benkler, Faris, Gasser, Miyakawa, and Schultze 2010; Nichols and McChesney 2009; Scherer 2010). It is one thing, however, to recognize that the media industries face tumultuous times but another altogether to see current conditions as cataclysmic (Picard 2009). In fact, notions that the media are in crisis must contend with the reality that they have grown immensely over the past 25 years, as Figure 6.1 demonstrates. 2 Figure 6.1 indicates that the total telecoms and network media economy expanded enormously over this period. In real dollar terms adjusted for infl ation, the size of the media economy in Canada expanded from $38 billion in 1984 to $56.6 billion in 2000 to $73.6 billion in 2008.3 Even after removing the wired and wireless telecoms sectors, the remaining seven sectors of what I call the network media industries—television, cable and satellite distribution, newspapers, internet access, internet advertising, radio, and magazines— expanded substantially from $21.4 billion to $32 billion between 2000 and 2008.